Spirit AeroSystems Holdings Inc (SPR) Reports Robust Revenue Growth in Q4 2023
Revenue: Increased by 37% to $1.8 billion in Q4 2023 compared to Q4 2022.
Operating Income: Improved to $198 million in Q4 2023 from a loss of $139 million in Q4 2022.
Net Income: Reported at $59 million in Q4 2023, a significant turnaround from a loss of $243 million in Q4 2022.
Earnings Per Share (EPS): EPS stood at $0.52 in Q4 2023, adjusted EPS at $0.48.
Free Cash Flow: Generated $42 million in Q4 2023, compared to a negative $66 million in Q4 2022.
Backlog: Ended Q4 2023 with a robust backlog of approximately $49 billion.
On February 6, 2024, Spirit AeroSystems Holdings Inc (NYSE:SPR) released its 8-K filing, revealing a significant improvement in its financial performance for the fourth quarter of 2023. Spirit AeroSystems, a leading manufacturer of aerostructures for commercial and military aircraft, reported a substantial increase in revenue and a swing to profitability in operating income.
Company Overview
Spirit AeroSystems, which was spun out of Boeing in 2005, is the largest independent supplier of aerostructures for commercial aircraft. The company's primary customers include Boeing and Airbus, with Boeing accounting for roughly 60% and Airbus about 20% of revenue in recent years. Spirit AeroSystems is particularly exposed to Boeing's 737 program, which is a significant revenue driver for the company.
Financial Performance and Challenges
The company's revenue for the fourth quarter of 2023 was $1.8 billion, a 37% increase from the same period in 2022. This growth was primarily driven by higher production deliveries on commercial programs, increased revenues in the Defense and Space and Aftermarket segments, and favorable pricing adjustments from the Boeing Memorandum of Agreement (MOA) executed in October 2023.
Operating income for the fourth quarter was $198 million, a stark contrast to the $139 million loss reported in the same period of the previous year. This improvement was largely due to favorable pricing adjustments to the Boeing 787 program as a result of the MOA, including forward loss reversals and a material right obligation liability reversal.
Despite these positive developments, Spirit AeroSystems faces challenges, including forward losses on the Airbus A350 and A220 programs due to increased supply chain, labor, and other costs. Additionally, the company is not providing guidance for 2024 due to uncertainties surrounding the 737 MAX production rate increases and ongoing price negotiations with Airbus.
Segment Results and Financial Tables
The Commercial segment saw a revenue increase of 42.6% in Q4 2023, driven by higher production and favorable pricing impacts from the Boeing MOA. The Defense & Space segment also experienced revenue growth, while the Aftermarket segment benefited from higher spare part sales.
Free cash flow for the quarter was positive at $42 million, reflecting a significant improvement from the negative free cash flow in the same quarter of the previous year. The cash balance at the end of Q4 2023 was $824 million, bolstered by proceeds from the issuance of common stock and exchangeable senior notes.
While Spirit AeroSystems has made strides in its financial performance, the company's future outlook remains cautious due to external factors affecting the aerospace industry, including supply chain fragility and geopolitical conditions.
Conclusion
Spirit AeroSystems' Q4 2023 results demonstrate a strong recovery in revenue and a return to profitability in operating income. The company's significant backlog and improved cash flow position it well for future growth, although challenges remain in the form of supply chain issues and uncertainties in production rates and pricing negotiations. Investors and stakeholders will be watching closely as Spirit AeroSystems navigates these challenges in the coming year.
For more detailed financial information and to view the full earnings report, please visit Spirit AeroSystems' 8-K filing.
Explore the complete 8-K earnings release (here) from Spirit AeroSystems Holdings Inc for further details.
This article first appeared on GuruFocus.
